Anglo American's (AAL) half-year figures were hit by weak commodity prices and ongoing South African labour-related problems. Still, new chief executive Mark Cutifani plans to rationalise costs linked to Anglo's existing $17bn (£11bn) project pipeline and to consolidate the executive structure - to generate additional annual cash flow of $1.3bn by 2016.
Waning receipts within the iron ore, thermal coal and copper segments hit underlying operating profit by around $758m. Although this was partially offset by a 129 per cent rise in profits to $571m at the De Beers diamond subsidiary. Accordingly, Anglo's overall underlying first-half earnings fell 28 per cent year on year to $1.3bn. Moreover, lower tax and working capital commitments helped drive a 19 per cent rise in net operating cash flow to $3.17bn.
With net debt up to $9.8bn, from end-2012's $8.6bn, management's new focus on stringent capital allocation looks understandable. But there's a limit to how much progress can be made over the next two years, given existing commitments to late-stage projects - 2014 should be the peak year. Nevertheless, around $1bn has already been trimmed from 2013's capital expenditure and Anglo is seeking a joint venture partner for its costly Brazilian Minas Rio iron ore project.
Goldman Sachs has upped its full-year 2013 EPS estimate by 13 per cent to 174¢ (from 225¢ in 2012).
| ANGLO AMERICAN (AAL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,427p | MARKET VALUE: | £19.9bn | |
| TOUCH: | 1,426-1,428p | 12-MONTH HIGH: | 2,092p | LOW: 1,196p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | NA | |
| NET ASSET VALUE: | 2,869¢ | NET DEBT: | 25% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 13.6 | 3.04 | 102 | 32.0 |
| 2013 | 14.4 | 1.99 | 31 | 32.0 |
| % change | +6 | -35 | -70 | - |
Ex-div:14 Aug Payment:12 Sep £1 = $1.53 | ||||
